BIG - Handheld Secondary Research Summary

•Megatrends in the food industry are health/nutrition, natural/organic, ethnic foods and flavors, snacking and convenience.

•Handheld entrees are one of the fastest growing refrigerated and frozen convenient meal solutions, with dollar sales up +16.5% in 2005 and +8.2% respectively in 2005. Refrigerated growth is driven by the self-serve and service delis.

•Consumers expect multiple benefits from convenience foods, such as nutrition, greater portability, quality and value. 55.9% of consumers who use convenience foods say they purchase items because they are portable.

•Portable foods are consumed in the home 72% of the time, in the car 44% of the time, and at the office 39% of the time.

•Frozen non-breakfast handheld entrees are the largest category of handheld foods at over $1 billion in dollar sales. And this category grew +5.1% in 2005. Example: Hot Pockets.

•Refrigerated non-breakfast entrees are the fastest growing handheld category with growth of +8.8% in 2005. Example: South Beach Diet Wraps.

•After three continuous years of decline, foodservice appetizer servings rebounded slightly to 8.34 billion servings in 2005. Declines in 2003, 2003 and 2004 are attributed to consumers trading down from mid-scale to QSR, where few appetizers are served.

•Chicken appetizers are offered 4.5x more on often on restaurant menus than beef appetizers.

•Sandwiches are the most common handheld item in foodservice. The fastest growing foodservice sandwich types are: breakfast wrap/burrito, up 60.4% in menu incidence in 2006; steak sandwiches up 29.7%; and chicken sandwiches up 26.9%.

•Convenient and microwavable products accounted for 30% of all new product introductions in 04/05.

•Many ethnic products are naturally handheld: burritos, tacos, taquitos, tamales, egg rolls, pot stickers, empanadas.

•Foodservice operators are looking for products and packaging that can easily be consumed in the car or transported home.

•Casual dining operators often perceive beef to be too heavy for the appetizer menu. Lighter options are preferred to reduce the number of patrons ordering appetizers as entrees, thereby lowering check average.

•Packaging for many traditional products is evolving to aid portability. A new trend in sandwich and snack packaging is containers shaped to fit in car cup holders.

•By 2013, merchandise-focused retailers are projected to sell more groceries than traditional grocery stores.

•Convenience stores have long appealed to single, middle class, 21-35 year old men. Many stores are now expanding their product offerings to appeal to busy working moms.

•Convenience products are often sold in all retail channels, but packaged differently based on retail outlet. For example, a single-serve taquito at a c-store, 6 pack of taquitos at traditional grocery and supercenters, and a bulk pack at club stores.

•QSR frequency of visits is growing and demographics are broadening. This is attributed to more healthful and premium menu choices.

•Nestle, Kraft, ConAgra and Heinz are the leading manufacturers of retail handheld products.

•Retail handheld items are more likely to contain pork and chicken than beef. Pizza flavors are the driver for most pork items.

•Specialty Brands/Windsor Foods, Schwans, and McCain are the leading manufacturers for foodservice appetizers.

•New technologies are continually emerging to improve all processed foods, including handheld items. As with all new products, manufacturer capabilities will drive partnership opportunities.

•There are five key drivers for handheld consumption: commuter, Mom’s taxi service, occupational driving, tweens/teens on the go, and light bites.